Since When Did Rich People Get So Stupid?

I learned today from a colleague about how Bernard Madoff operated. Yes, I admit I am obsessed: he preyed on his own people, he ransacked Jewish philanthropies, and consequently, many of the sources of funding for progressive social justice projects. Here on Long Island where I live, many charities are reeling. He preyed on people at two country clubs, Glen Oaks and Fresh Meadows. But this is the tip off. According to this colleague whose husband said no to Madoff overtures twice, he only offered investors short term capital gains.

Now that might be the hint that something was fishy. Short term capital gains are treated as ordinary income and therefore, taxed at the highest income level of the taxpayer.

If he had been offering long term capital gains, he would have had to keep better records. Because long term capital gains qualify for a better tax rate--15% currently unless eligible for a special even lower rate--the record keeping would have been open to greater scrutiny, in order to assure that no one was cheating the government out of its share of taxes.

Of course, no one knows, except for Bernard Madoff and his associates, when the investment firm became a ponzi scheme. It might have started off legitimate and gone under when the financial market tanked. Or it might have been a fraud from the beginning. That we will have to wait to find out.

Not only isn't the financial bailout program working, but neither is the "hope for homeowners." Read this critique in ProPublica.org, funded by the Sandler Family Foundation, which hopefully didn't invest with Madoff. However, ProPublica.org was funded by JEHT Foundation, which did close its doors, due to Madoff investments, just this week.